Tokenized Stocks: The Future of Equities on the Blockchain
Tokenized stocks are emerging as a transformative development bridging conventional finance (TradFi) and decentralized finance (DeFi). By converting publicly traded company shares into digital tokens on a blockchain, tokenized stocks promise 24/7 trading, global accessibility, and seamless integration into the on-chain economy.
Understanding Tokenized Stocks
Tokenized stocks, or tokenized equities, are digital representations of equity shares in traditional markets. These tokens are backed 1:1 by real shares held by a regulated custodian, ensuring transparency and authenticity. Issued and managed on a blockchain, tokenized stocks enable trading, lending, and utilization in DeFi protocols.
Types of Tokenized Stocks
There are two main types of tokenized stocks:
- Covered (Backed) Tokenized Stocks: These are backed by actual shares held in custody, providing legal claim on the underlying equity.
- Synthetic Tokenized Stocks: These use smart contracts to mirror stock prices and are prevalent in DeFi environments.
Benefits and Risks
Tokenized stocks offer benefits such as 24/7 trading, global access, DeFi utility, and fractional ownership. However, investors should be aware of risks like limited voting rights, thinner liquidity, redemption fees, and tax implications.
Significance for DeFi, TradFi, and Retail Investors
Tokenized stocks play a crucial role in merging traditional and crypto markets. They provide DeFi with a new asset class, offer TradFi real-time settlement and lower costs, and grant retail investors easier access to global markets.
The Rise of ICM 2.0
Tokenized stocks are driving the emergence of Internet Capital Market 2.0 (ICM 2.0), where all financial assets are on-chain, accessible 24/7, and interoperable with smart contracts. This shift democratizes investing, reduces intermediaries, and enhances asset programmability.
Leading Projects
Projects like BackedFi, Robinhood EU, Ondo, Kamino, and Raydium are at the forefront of tokenized stocks integration, making them a core element of on-chain finance.
Future Outlook
As tokenized stocks mature, they may transition from niche instruments to mainstream portfolio assets. ICM 2.0 is expected to make tokenized stocks a pivotal chapter in financial decentralization.
